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How the Economy Is Affecting Hospitals

Published on Wednesday August 4th , 2010

The report “The Economic Crisis: Ongoing Monitoring of Impact on Hospitals,” released in November 2009 by the American Hospital Association, details how the economy is affecting hospitals in regard to their patients, finances, and physicians.

The economy is affecting the patients and communities that hospitals serve. The number of emergency department patients without insurance is increasing for six out of 10 hospitals, and a higher proportion of patients cannot pay for health care. This is causing hospitals to see more patients who are covered by Medicaid and other public programs for low income populations. Some people are putting off needed care altogether, and hospitals are seeing significant decreases in the amount of patients seeking inpatient and elective services. With patients not being able to afford health care, more of them are seeking community health services. An increased need for subsidized services, such as public clinics, screenings, and outreaches, was seen by over half of hospitals. But with hospitals experiencing decreasing budgets and charitable donations, one in five had to reduce these types of services concerning post acute care, patient education, and behavioral health.

The economy has affected the financial situation of most hospitals. Cutbacks to address economic concerns have been made in every nine out of 10 hospitals, with more than half – 51 percent – reducing hospital staff. Other changes include 84 percent of hospitals cutting administrative expenses, 20 percent reducing services, and 7 percent of hospitals considering a merger. The financial setbacks have also affected the hospital facilities themselves, with seven out of 10 hospitals cutting spending for facility upgrades, clinical technology, and information technology since the beginning of 2008. While hospitals have had to cut their budgets for future endeavors, they have also had to stop current ones. More than 7 of 10 hospitals decided to quit or reduce projects that were in progress, with 40 percent scaling back on already in-progress projects, 8 percent stopping them altogether. Forty-nine percent of hospitals made the decision to not even begin projects that were already planned.

The economy has affected the physicians working in hospitals. An increase of the amount of financial support physicians were seeking was reported in eight out of 10 hospitals, which included on-call pay and employment. Seventy-nine percent of physicians were seeking increased pay for on-call or other services they provided to hospitals and 74 percent were seeking hospital employment. Some physicians reported struggling to keep their practices open, with 36 percent seeking to sell their practice and 26 percent seeking to partner on equipment purchases.